The difference between a prequal and a preapproval

What is a mortgage prequalification?

Prequalification is an early step in your home-buying journey. When you pre-qualify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a rough estimate you provide of your credit score.

Prequalification is also an opportunity to learn about different mortgage options and work with your broker to identify the right fit for your needs and goals.

What is mortgage preapproval?

Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and your mortgage broker will verify the information you provide by collecting documents (W2s, paystubs, tax returns, etc.). They’ll also perform a credit check. If you’re pre-approved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 120 days.